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Socialists leave coalition talks

Talks to resolve a dispute over changes in Portugal's coalition government have failed, the leader of the country's main opposition party said.

The coalition nearly split on July 2 when foreign minister Paulo Portas, the leader of the junior party, threatened to resign.

A compromise was reached when Mr Portas was appointed deputy to prime minister Pedro Passos Coelho, but President Anibal Cavaco Silva asked the government to reach a consensus with the Socialists, Portugal's leading opposition party.

Late on Friday night, Socialist leader Antonio Jose Seguro said his party had left the talks and said Mr Cavaco Silva must now accept the compromise agreement or call early elections.

The dispute caused turmoil on financial markets as fears arose over Portugal's ability to uphold the terms of its 78 billion-euro (£67 billion) bailout.

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